Corporate Governance

Expressing our view

Our Corporate Governance activities are an integral part of our investment process and go beyond the fiduciary duty to exercise our voting rights. As fiduciary, we act independently and solely in the best interest of our client investors. We believe that good Corporate Governance is an important source of higher relative shareholder returns on equity investments[1] in the long-term.

Going beyond

fiduciary duty

to exercise our voting rights

"Corporate governance has been a key element of our investment process for more than 20 years. We engage closely with our investees and have developed a comprehensive and distinctive corporate governance philosophy."

Nicolas Huber Head of Corporate Governance

Corporate Governance Services

Boards of Directors

Qualified, experienced, diverse and independent directors are mandatory for competent boards for an efficient decision-making process and long-term sustainable company performance. We understand diversity as a broader concept that encompasses gender, age, nationality, professional background, qualifications, and tenure:

extended transparency requirements on directors: CVs and board meeting attendance should be disclosed on the website

50% or more of the board members should be independent

tenure is considered as a critical factor for independence (max. 10 years)

mandatory age limit set by the company is supported as to ensure a regular board refreshment

separation of CEO and Chairman roles is supported for an appropriate balance of power and impartiality

a direct and clear responsibility on ESG matters should be assigned to a director in the board

Board members need to spend sufficient time and have an appropriate degree of ‘independence in mind’ in fulfilling their responsibilities as directors:

maximum 3 board seats for executive directors

maximum 5 board seats for non-executive directors

Executive Compensation

Transparency and comprehensibility on qualitative and quantitative performance indicators are necessary to allow sufficient oversight of remuneration systems

Balance between fix and variable pay and appropriateness of total pay need to be ensured

Relevant peer /pay comparison should be considered

Regular say-on-pay should take place as an important shareholder right

Relevant and adequate bonus-malus and claw-back mechanisms and reasonable deferral periods for executives need to be in place as key elements of a sustainable long-term oriented compensation structure

Shareholder Rights

We support the ‘one-share-one-vote’ principle and view critically any voting caps

Interests of minority shareholders should be properly considered and necessary measures should be put in place

We support improved reporting practices on shareholder relevant information

We support proxy access proposals, given that they are structured in a manner that does not contradict the shareholder interests

Auditors

Key elements of appropriate disclosure as his term of appointment and his rotation, to demonstrate his independence and objectivity: 5 year

Disclosure of the non-auditing services, and the appropriateness of the related fees to validate the independence of the external auditors

ESG Issues

Key requirements on companies regarding the disclosure and management of ESG issues

Governance Engagement Approach

1.
For our debt investments and related bondholder meetings, a dedicated and separate process is set up and managed by the Fixed Income Platform of Deutsche Asset Management in order to avoid any potential conflicts of interests

CIO View

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